08.15.13 8:45 AM ET
Booz Allen Keeps Winning Government Security Contracts After Snowden Leak
If you’re a contractor, and one of your employees betrays your trust and makes your biggest client—make that your only client—look like a fool, it’s a safe bet you wouldn’t get much repeat business. Unless your business is government contracting, the client is the federal government, and the contractor in question is Booz Allen Hamilton.
NSA leaker Edward Snowden, whose post at Booz Allen enabled him to access damaging information, has essentially been driven to Siberia or close enough to it. But Booz Allen Hamilton has not exactly been exiled since Snowden’s revelations.
This week, the company won a part in a $6 billion cybersecurity contract from the U.S. government. The contract, awarded to 16 companies and possibly the largest unclassified cybersecurity agreement in American government, tasks Booz Allen with providing federal agencies with tools to detect cybersecurity threats (!).
Booz Allen has decried the actions of Snowden, whom it employed for three months. The Air Force announced in July it did not hold the firm responsible for the leak.
This isn’t the first big recovery for the company, which got 99 percent of its $5.7 billion revenue from U.S. government contracts in fiscal year 2013. In 2006, Booz Allen faced Justice Department allegations it had overbilled the government for travel expenses. Along with three other firms, the company settled the case for $3.4 million (hardly a dent with sales of $3.7 billion that year). In 2008 it granted “top secret” clearance to an employee who had recently been convicted of lying to government officials. And in 2012, the Booz Allen San Antonio office was temporarily suspended by the Air Force when it used nonpublic Pentagon data to give the company an advantage. Through it all, government contracts continued to flow.
Here are some of the other big deals Booz Allen has landed after the Snowden revelations: on August 2, a $900 million contract to support cybersecurity at the Space and Naval Warfare Systems Center Atlantic, providing services to the Navy and Marine Corps among others; on July 23, $78 million in civil health contracts from the Department of Veterans Affairs and the Department of Health and Human Services; on June 21, a $25.8 million contract with the Department of Transportation.
Earlier in the year, Booz Allen was awarded: a $315 million contract with the National Geospatial-Intelligence Agency; $11 billion in the form of two five-year contracts from the Department of Homeland Security; a $5.6 billion Defense Intelligence Agency contract; $95 million in contracts with the Space and Naval Warfare Systems Command; and yet another set of Department of Transportation contracts worth $102 million. James Fisher, the senior manager of media relations at Booz Allen, declined to comment on this latest contract and the post-Snowden landscape for the firm.
Beltway firms large and small have been buffeted by the sequester. But Booz Allen continues to score new business. Its stock has, in fact, rallied since the Snowden revelations.
So what gives? Why would the federal government put its eggs in a basket that sprang such a prominent leak? According to Joe Newman, communications director for the watchdog group Project on Government Oversight, companies like Booz Allen are part of a select few capable of providing certain services. “When you start talking about these contractors at the top of the list, a lot of times they’re what we call ‘too big to suspend or debar.’ Their tentacles are so deep in the government that it’s very hard for the government to punish them,” said Newman. “For example, Lockheed Martin and Boeing have so many different critical contracts with the government in terms of weapons programs that if they were to commit fraud or corruption, they’d get fined but the government can’t afford to suspend them; in fact, they have been found to be bending and breaking the rules in the past and they’re fined, but it’s just a slap on the wrist.”
According to Newman, firms like Booz Allen also have a more personal advantage. “There’s more to it than the amount of business they do. These businesses also spend millions to lobby, and there’s also the revolving door. Former executives of Booz Allen are in government, and people in government have gone into Booz Allen’s payroll; they know each other—they look out for their friends,” he said.
“In many ways these kinds of companies should be considered an arm of the national security establishment,” agrees Jay Stanley, a senior policy analyst at the ACLU Speech Privacy and Technology project. “They’ve been involved in many of the most controversial surveillance programs, and if you look at their top-level leadership, they’re drawn almost exclusively from national security agencies.”
Booz Allen specifically does not have an especially strong lobbying presence. As reported by Politico, the firm had no active lobbying contracts as of June of this year. Its employees gave $413,538 to campaigns in 2012, and 60 percent of the presidential race donations went to the campaign of Barack Obama. By contrast, industry peers like Raytheon, General Dynamics, and Boeing poured millions into lobbying in 2012.
Lobbying presence or not, with more than 24,000 employees, a market capitalization of over $3 billion and billions in federal contracts under its belt, Booz Allen Hamilton isn’t going anywhere. Though the first risk factor listed in its SEC filings is its dependence on good relationships with government agencies, it would seem the company has done well by following the old workplace adage of making itself indispensable. It’s Too Big to Fire.